Year-End Tax Planning Checklist

Reconcile every operating, savings, and credit-card account in QuickBooks or Xero through the most recent closed month. Clear stale uncleared transactions older than 60 days — they distort the projected cash position used for Q4 estimate calculations.

Run aging reports and tie totals to the GL control accounts. Investigate any unreconciled differences before projecting taxable income — sub-ledger drift is the most common source of bad year-end projections.

Compare YTD by month and against prior year. Flag accounts with unexpected swings — misposted journal entries, vendor miscategorizations, and bank-feed rules dropping items into Ask My Accountant are usual suspects.

Confirm the filing entity (C-corp on 1120, S-corp on 1120-S, partnership on 1065, or sole prop on Schedule C). Election changes mid-year are rare but trigger different planning moves — S-corps need reasonable-comp analysis, partnerships need basis tracking per partner.

S-corp owners must take reasonable W-2 wages before distributions. Pull comparable-salary data (BLS or RCReports) and document the analysis in the workpaper. Underpaid wages are the top S-corp audit issue and reclassification turns distributions into back wages plus FICA.

In Gusto, ADP, or Rippling, verify SSNs, addresses, and state withholding setup. Mismatched SSNs trigger SSA notices in February; address errors mean undelivered W-2s and reissue fees.

Pull every vendor paid $600+ for services, exclude corporations (except attorneys and medical), and confirm a W-9 is on file. Chase missing W-9s now — backup withholding at 24% kicks in if you cannot get one before the Jan 31 filing deadline.

Tie filed 941s to GL payroll-tax expense and EFTPS deposit history. Late-deposit penalties (2/5/10/15%) compound quickly; catch any missed semiweekly deposit before year-end so the W-3 reconciles cleanly.

Accrual-basis employers can deduct bonuses paid by March 15 of the following year if fixed and determinable by Dec 31 (the 2.5-month rule). Confirm board approval is documented before year-end so the deduction holds up on exam.

Build a Q4 forecast from YTD actuals plus expected Q4 activity, then apply known book-to-tax adjustments (M-1 items, depreciation differences, meals 50%). The projection drives whether the rest of the planning leans into deductions or loss-utilization.

For profitable years, evaluate Section 179 (limited to taxable income) and bonus depreciation (no income limit, phasing down each year). Asset must be placed in service by Dec 31 — invoicing alone is not enough; document delivery and setup dates.

For loss years, model the post-TCJA 80% NOL limitation against next-year projections and decide whether to accelerate income instead. For S-corps and partnerships, update each owner's stock and debt basis schedules — losses without basis are suspended, not deducted.

Section 199A QBI requires W-2 wage and UBIA testing above the income threshold. For pass-through clients in PTET states (NY, CA, NJ, etc.), confirm the entity-level election is filed by the state's deadline so owners get the federal SALT-cap workaround.

Section 174 still requires R&E capitalization — confirm the client has tracked qualified expenses by project. For Section 41 R&D credit, document the four-part test contemporaneously; retroactive substantiation is the top reason the credit gets disallowed on exam.

Compare current-year vs. next-year projected marginal rates including QBI phaseouts. Cash-basis clients can defer December invoices; accrual-basis clients have less flexibility but can time deliveries and milestone-based revenue recognition.

Prepay state taxes (subject to SALT cap), insurance under the 12-month rule, and recurring service contracts. For cash-basis clients, credit-card charges count as paid when charged — useful lever for late-December moves.

Asset must be placed in service — installed and ready for use — by Dec 31, not merely ordered. Coordinate with operations on delivery and setup; back-dated in-service dates are an audit flag.

Model the after-tax cost of buy (179/bonus depreciation, interest deduction) vs. operating lease (full deduction over term). Factor in cash flow and ASC 842 balance-sheet treatment if the client follows GAAP.

Q4 individual estimates are due Jan 15; C-corp estimates are due Dec 15. Use the annualized-income method if income is back-loaded, otherwise the prior-year safe harbor is simpler.

Safe harbor for individuals: 100% of prior-year tax (110% if prior AGI exceeded $150K). Confirm cumulative withholding plus estimates already paid clear the threshold. Missing safe harbor exposes the client to underpayment penalty even if the return is paid in full by April.

Submit the catch-up via EFTPS or the state portal before Jan 15. Increasing year-end W-2 withholding (treated as paid evenly across the year) is an alternative that eliminates the prior quarters' underpayment.

Solo 401(k) employee deferrals must be elected by Dec 31; employer contributions can wait until the return due date including extensions. SEP-IRA and SIMPLE-IRA have their own deadlines — confirm against the plan document, not just the federal calendar.

Book the meeting with the partner or tax advisor at least three weeks before year-end. December calendars compress fast — waiting until mid-month means decisions get rushed past the deadlines that matter (Section 179 placed-in-service, PTET elections, retirement deferrals).

Package the projected TB, Q4 forecast, basis schedules, depreciation roll-forward, and the 1099 vendor worksheet. Deliver via SmartVault or TaxDome — never email SSN-bearing documents.

Review pending legislation, expiring TCJA provisions, and IRS revenue procedures issued in Q4. Note any items where deferring or accelerating into the new year produces a different result under updated rules.

Finalize the planning memo summarizing decisions, supporting calculations, and action items with owners. Partner signature on the memo is the audit-trail control — it documents that the strategies were reviewed and approved, not just suggested.